Government Share of Health Care Bigger than Advertised

August 4, 2011

That the government share of health care is rising is no news. The truth hidden from view, however, is that government's share of health spending already exceeded 50 percent in 2009, says Christopher J. Conover, a research scholar at Duke University's Center for Health Policy and Inequalities Research and an adjunct scholar at the American Enterprise Institute.

Health care-related tax subsidies will this year amount to nearly $350 billion annually.

The federal share of this total, $265 billion, is more than the federal government paid for its share of Medicaid in 2009.

Thus, ironically, the federal government spent more that year to subsidize private health insurance than it spent on public health insurance for those who have low incomes (although this no longer is true).

Unlike Medicare and Medicaid, such subsidies do not show up as a line item in the federal budget either as expenditures or as deductions from expected revenue. For this reason, tax expenditures are less visible to most Americans than are the direct expenditures financed by the national treasury. Health-related tax expenditures take many forms, but more than 90 percent of costs attributable to them relate to the tax exclusion for employer-provided health benefits.